Financial services firms are more stringent than nearly every other private-sector industry when it comes to pre-employment background checks. You’re likely to be subjected to screenings for a criminal record, credit checks, education and work history verifications and even drug tests. Some red flags are career killers; others are more subject to interpretation and leniency if you’re honest and handle the situation correctly.

“From a regulation standpoint, financial institutions have to run a criminal background check at a minimum,” said Nick Fishman, VP of communications at SterlingBackcheck. “They are concerned with crimes related to dishonesty or moral turpitude, which is a pretty wide umbrella.”

Each financial institution may have its own unique requirements. Some require you to take a drug test, a situation that has gotten murkier now that so many states have legalized marijuana for medicinal purposes and in some cases recreational uses. Many will verify academic credentials, past employers and do a credit check.

It’s common among younger candidates who have not been screened in the past to not believe that an employer is going to conduct a background check, or they think that a background check will not discover something they don’t want the hiring firm to know, he said.

“If they’ve lied on their resume, they should realize that an employer is going to do this background check, so it’s always better to be honest,” Fishman said. “The best course of action to divulge [a potential red flag] up front, because the last thing you want when considering hiring someone is a surprise.

“It’s best to be open and honest with someone, especially when they are going to receive that information eventually anyway,” he said.

Criminal background checks

The depth of criminal background checks depends on where you’re working. Small financial firms can be more subjective – federally-insured banks can’t.

Section 19 of the Federal Deposit Insurance Act (FDIA) prohibits federally-insured banks from hiring anyone with a history of theft, embezzlement, money laundering or dishonesty, says Chris Dyer, president and CEO of PeopleG2, an Anaheim Hills, California-based firm that specializes in pre-employment background screening.

Certain exceptions can be made, but it’s a difficult process. The Federal Deposit Insurance Commission (FDIC) can provide a waiver exception for certain minor offenses that occurred more than 10 years ago. Dyer recalled a case of a man who was granted a waiver after being busted for shoplifting decades earlier.

Firms that sell and trade securities are excluded from hiring applicants who have any felony criminal convictions or have been convicted of misdemeanors involving acts of dishonesty.

Now that’s not to say misdemeanors or crimes that occurred outside of the period in question won’t necessarily trip you up. It depends on the firm and how you position it.

“With petty drug arrests and DUIs, it really depends on the institution,” Dyer said. “The bigger the institution, the more objective they are likely to be. It can be black or white. Smaller firms are typically more subjective.”

If you’re not forthright about a conviction, your chances plummet, said Adam Zoia, CEO of Glocap, a Wall Street search firm. “When it comes to criminal matters the best approach for a candidate is to pre-disclose and explain such as a youthful DUI,” he said. “Although there is no guarantee that a prospective employer will proceed, it increases the odds to raise it proactively.”

Credit checks

Most financial firms do credit checks for people involved in revenue-generating activities or handling money. When it comes to support positions, it can go either way.

Ross Baltic, managing partner at Mercury Partners, a New York-boutique search firm, said that all of his clients do thorough credit checks in addition to criminal background checks. If you forgot to pay a bill on time, you should be fine. The real problems are bankruptcy and deep debt.

“If this person is so far in debt and has some serious financial problems, banks will wonder if they are then more likely to steal money,” said Dyer. “Especially if the wage being paid won’t cover the debt.”

Drug tests

Simply put: many firms do pre-employment drug tests, some don’t. One word of warning for consultants: clients can ask you to take a drug test before working on a project, even if you’ve been with the firm for years. It happens.

Work and education verification

Again, it depends on the firm, but many hire third-parties to verify every detail on a resume, including dates of employment and GPAs. “We’ve seen many candidates over the years tripped up because of either inaccurate employment dates or more commonly leaving a very short term job off his or her resume,” said Zoia.

The best piece of advice is to not embellish dates of employment on your resume. While it may seem harmless, it can come back to bite you come the offer stage.Follow @danbutchrwrites

Comments (1)

Regarding background checks, you state:
“Firms that sell and trade securities are excluded from hiring applicants who have any felony criminal convictions or have been convicted of misdemeanors involving acts of dishonesty.”
New York State law says that a person may not be denied a job or a license due to a criminal conviction unless it is relevant to the position. That is, the conviction indicates that the person is unable to perform the job or is unwilling to perform the job or taking the job would create an increased risk to the job holder or someone else. Laws denying a person a job for any position at a company for any conviction have been declared to be unconstitutional. Thus a Wall Street firm, an insurance company that denied a person a job due to a criminal conviction, regardless of what the conviction was for and regardless of what positon the person has in the company, are violating New York State and Federal law. An applicant who believes he has been illegally denied a job can file a complaint with the New York State Division of Human Rights (212 870-8400) or the New York City Commission on Human Rights (if employed in New York City) (212 306-7500). They can contact the Legal Action Center at 212 243-1313 or http://www.lac.org. They can hire an attorney to represent them and sue for damages. An attorney who specializes in cases like this might also be able to take action at the federal level.
I am not an attorney so I recommend anyone who believes he has been discriminated against should consult a knowledgeable person. Companies that think that they might be engaging in illegal discrimination might want to consult a knowledgeable person to prevent getting into trouble.